Olympic fever and the start of the new school year boosted sales for Sports Direct International (SPD) in the second quarter, offsetting what had been a disappointing start to the year as wet weather and a dismal European Championships kept shoppers away. The group has reported bumper interim results, with underlying pre-tax profits up 26 per cent to £125m, driven by increased sales across all business lines.
Retail sales grew 23 per cent on last year to £982m, helped by a 54 per cent increase in online revenues, which now represent 12.5 per cent of total sports retail sales. The premium lifestyle division also posted strong growth, boosted by the acquisition of the Flannels brand.
But higher sales did come at a price - gains in the core UK sports retail unit were partly offset by a 20.2 per cent rise in operating costs. Management attributed the increase to the 20 stores bought from failed retailer JJB Sports and increased labour costs from additional warehouse capacity. Price cuts also dented gross margins, which fell by 30 basis points to 41.2 per cent.
Net debt rose 10.3 per cent due to investments in inventory and acquisitions. Chief executive Dave Forsey has big expansion plans, including the ambition to extend operations to all 17 eurozone countries within five years.
Broker Seymour Pierce has raised its full-year pre-tax profit forecasts from £195m to £205m, taking EPS from 22.1p to 23.2p.
| SPORTS DIRECT INTERNATIONAL (SPD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 380p | MARKET VALUE: | £2.28bn | |
| TOUCH: | 380-381p | 12-MONTH HIGH: | 415p | LOW: 189p |
| DIVIDEND YIELD: | nil | PE RATIO: | 17 | |
| NET ASSET VALUE: | 92p* | NET DEBT: | 29% | |
| Half-year to 28 Oct | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 0.89 | 100 | 12.5 | nil |
| 2012 | 1.09 | 125 | 16.1 | nil |
| % change | +22 | +25 | +29 | - |
| *Include intangible assets of £231m, or 39p a share | ||||
